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The Morning Risk Report: Prosecutors, Transportation Department Scrutinize Development of Boeing’s 737 MAX
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Investigators near debris at the site of last week’s Ethiopian Airlines crash. PHOTO: TONY KARUMBA/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Federal prosecutors and Department of Transportation officials are scrutinizing the development of Boeing Co.’s 737 MAX jetliners, according to people familiar with the matter, unusual inquiries that come amid probes of regulators’ safety approvals of the new plane.
A grand jury in Washington, D.C., issued a broad subpoena dated March 11 to at least one person involved in the 737 MAX’s development, seeking related documents, including correspondence, emails and other messages, one of these people said. The subpoena, with a prosecutor from the Justice Department’s criminal division listed as a contact, sought documents to be handed over later this month.
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It wasn’t immediately clear whether the Justice Department’s probe is related to scrutiny of the Federal Aviation Administration by the DOT inspector general’s office, reported earlier Sunday by The Wall Street Journal, which focuses on a safety system that has been implicated in the Oct. 29 Lion Air crash that killed 189 people, according to a government official briefed on its status. Aviation authorities are looking into whether the anti-stall system may have played a role in last week’s Ethiopian Airlines crash, which killed all 157 people on board. The subpoena was sent a day after the Ethiopian Airlines crash.
A Boeing spokesman declined to comment, saying the Chicago-based company wouldn’t respond to questions concerning legal matters or governmental inquiries.
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From Risk & Compliance Journal
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U.S. Places Sanctions on Russians Over Conflict in Ukraine
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The U.S. imposed sanctions on a number of Russian individuals and firms in response to a November attack off the coast of Crimea and the annexation of the Ukrainian peninsula five years ago, Risk & Compliance Journal’s Kristin Broughton reports. The sanctions were imposed in conjunction with the European Union and Canada, which took similar actions, the U.S. Treasury Department said.
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Volkswagen CFO Frank Witter in 2018. PHOTO: OMER MESSINGER/EPA-EFE/REX/SHUTT/EPA/SHUTTERSTOCK
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The Securities and Exchange Commission’s charges against Volkswagen AG dealt a blow to the efforts of its finance chief in his yearslong quest to engage with investors to rebuild trust in the company. Chief Financial Officer Frank Witter, in an email to The Wall Street Journal, said he is in regular contact with investors and that the company’s recent debt sales show Volkswagen has progressed in regaining “the trust of capital markets.”
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The U.S. college admissions scandal revealed in a federal indictment has prompted lawmakers in Washington to consider policies that could curtail the influence of wealth in college admissions. Though the scheme concerned illegal bribery and racketeering charges—with more than 50 admissions consultants, college athletic coaches and parents indicted—it has resurfaced broader concerns about legal methods wealthy families regularly use to gain entrance to elite universities.
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Law-enforcement personnel block a road during an investigation of the cargo-plane crash in Anahuac, Texas, on Feb. 23. PHOTO: BRETT COOMER/ASSOCIATED PRESS
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Federal air-crash investigators suspect that pilot errors, rather than aircraft malfunctions, led to an Atlas Air cargo plane’s nosedive near Houston in February that killed all three people on board, according to people familiar with the details.
National Transportation Safety Board experts, these people said, are focusing on a likely sequence of events that started with the crew of the Boeing Co. 767 approaching Houston’s George Bush Intercontinental Airport on Feb. 23 inadvertently commanding dramatically increased engine thrust. Turbulent air could have jostled the arm of one of the pilots, causing the engines to rev up to takeoff power, one of these people said.
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The value of diner data is rising as restaurant groups look to target customers with individualized products and services. PHOTO: DANIEL TEPPER FOR THE WALL STREET JOURNAL
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OpenTable is barring restaurants from sharing data with rival booking services without its permission, intensifying a fight for control of the information diners disclose when they make reservations online. The table-booking service will block restaurants from giving competitors access to diner data acquired through OpenTable unless they pay new fees, according to its updated client agreement and a copy of a new pricing plan viewed by The Wall Street Journal.
Data about diners is becoming increasingly valuable, as restaurant groups look target customers with individualized products and services. Chains are using the information to tweak menus, flag diners’ allergies and track spending patterns.
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Median pay for CEOs in a Wall Street Journal’s analysis was $12.4 million, with a median pay raise of 6.4%. From left, Palo Alto Networks’ Nikesh Arora, Hologic’s Stephen MacMillan and Disney’s Robert Iger. PHOTO: BLOOMBERG NEWS; GETTY IMAGES; REUTERS
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The strong U.S. economy has created millions of jobs and pushed up wages for many Americans. It also helped many big-company CEOs secure another raise and total compensation worth $1 million a month. Median compensation for 132 chief executives of S&P 500 companies reached $12.4 million in 2018, up from $11.7 million for the same group in 2017, according to a Wall Street Journal analysis. The gains were driven by robust corporate profits and strong stock market returns for much of the year.
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PG&E Corp. is likely to name Bill Johnson, retiring head of the Tennessee Valley Authority, as its new chief executive as early as this week and to announce an overhaul of its board backed by some of its largest investors, according to people familiar with the matter.
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PricewaterhouseCoopers in Luxembourg; PwC reached a $335 million settlement with the FDIC related to its audits of a U.S. bank that failed in 2009. PHOTO: VINCENT KESSLER/REUTERS
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The Federal Deposit Insurance Corp. said it has reached a $335 million settlement with PricewaterhouseCoopers LLP related to its audits of Colonial Bank, a financial institution that failed in 2009. In 2012, the FDIC sued PwC and Crowe Horwath LLP for more than $1 billion for failing to catch fraud that led to the failure of Colonial Bank, one of the largest bank collapses during the financial crisis.
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The German auditor of a Brazilian dam that burst in January has informed the dam’s owner, Vale SA, that an external review panel has raised questions about its assessment of eight other dams in Brazil, according to a person familiar with the matter.
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Steinhoff International Holdings NV said that a probe into accounting irregularities at the furniture retailer found that former executives inflated profits and asset values over an extended period of time. The unraveling of the fraud at the South African company has taken more than a year, hitting investors across the globe, from pension funds in its home country to some of Wall Street’s biggest banks.
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An employee holds a Worldpay payment machine in a retail outlet in London. The deal between FIS and Worldpay creates a global payments giant. PHOTO: CHRIS RATCLIFFE/BLOOMBERG NEWS
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Fidelity National Information Services said Monday it has agreed to acquire Worldpay Inc. for about $35 billion in cash and stock, creating a global payments giant in a bid to reach more customers as merchants and their clients complete an increasing number of transactions online.
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Deutsche Bank AG and Commerzbank AG on Sunday confirmed they are formally discussing a merger, marking a new phase after years of speculation about the troubled fates of Germany’s two biggest banks and a stark acknowledgment of the pressures both lenders face.
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Lyft Inc. plans to peg its valuation at between $21 billion and $23 billion when the ride-hailing service kicks off the roadshow to market its initial public offering Monday, people familiar with the matter said.
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